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2 small-cap dividend bargains that could make you very rich

Gateley Holdings (LSE: GLTY) was unchanged in Wednesday business despite the release of a perky trading statement.

Non-executive chairman of the corporate lawyers, Nigel Payne, said the business continues to perform well and is trading in line with management’s expectations. Following a year of “significant expansion and investment,” he said Gateley continues to achieve “solid” organic growth, while remaining focused on making sure that “complementary acquisitions which are earnings accretive to the group” happen.

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Driven by the strength of its service offering, its ability to retain and attract excellent staff and expand on existing client relationships, Gateley remains well placed for the future.  Further new recruits have settled in well across the group including professional staff in Gateley Hamer, Gateley Capitus and across its core national legal divisions,” Payne added.

The statement confirms the terrific momentum seen recently over at Gateley. The Birmingham-based firm announced in July that revenue boomed 15.7% in the 12 months to April, to £77.6m, a result that drove pre-tax profit 18.8% higher to £13.1m. The result reflected the vast sums Gateley is splashing out on organic investment as well as acquisitions.

Gigantic yields

Last year’s hearty profits boost prompted the company to hike the dividend to 6.6p per share from 5.64p in fiscal 2016.

And with the City expecting further hefty earnings rises (increases of 15% and 7% are estimated for this year and next), chances are that payouts should continue stomping higher. Indeed, current forecasts suggest that a dividend of 7.2p in the year to April 2018 is in the pipeline, while a 7.6p reward is chalked in for 2019.

These figures yield an incredible 4.6% and 4.9% respectively. And with Gateley also carrying a very attractive forward P/E ratio of 14.4 times (not to mention a corresponding PEG multiple bang on the bargain watermark of 1), I reckon those seeking great growth and income shares at a discount need to give the business serious attention.

Recruit another bargain

I also believe SThree (LSE: STHR) is a terrific bet for those looking to make their fortune on a budget.

Earnings are predicted to swell 12% in the year to November 2017, and by a further 10% next year, leaving the recruitment specialist dealing on a forward P/E multiple of 14.5 times (as well as a PEG rating of 1.2).

And looking at the dividends, while a projected payment of 14p per share for fiscal 2017 would be flat from the prior period, this still yields a mighty 4.1%. SThree is expected to get dividends rising again from next year, although an amount of 14.1p expected in 2018 yields the same.

I am convinced SThree is a brilliant bet for those seeking abundant returns for many years to come. Its international expansion programme continues to deliver titanic results, and gross profits rose 5% during June-August, to £73.7m, led by its US unit where profits surged 20% year-on-year.

And with the company having chosen to focus on the fast-growing contract market, I believe it should remain on course to deliver exceptional shareholder returns in the years ahead.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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